SL urged to get policies right for globally-competitive apparel sector

„„By Shabiya Ali Ahlam Sri Lanka’s apparel sector has been urged by the World Bank (WB) to capitalise on its stance as a high quality and sophisticated manufacturer by making the most of the opportunities present and implementing the right policies to maintain a healthy position in the increasingly competitive global clothing market.

Acknowledging that competition is increasing in the international market with buyers moving towards greater consolidation in sourcing decisions and the impending approval of the Trans-Pacific Partnership (TPP), WB Lead Economist Gladys Lopez-Acevedo said: “Sri Lanka should seize this opportunity and implement policies to become a regional leader in creating good jobs, bringing more women into the work force and diversifying its products and end markets to increase skills and value.”

Acevedo made these comments in Colombo yesterday at the launch of WB’s latest book titled ‘Stitches to Riches: Apparel Employment, Trade and Economic Development’, a publication the economist co-authored. The report is aimed at demystifying the global, South Asian, and Sri Lankan apparel markets. It estimates the potential gains in exports and jobs, including for women whilst identifying policies that could unleash the island nation’s export and jobs potential, compared with those of its closest competitors in the Southeast Asia including Vietnam, Cambodia, and Indonesia. In a bid to maximize the competitiveness of the local apparel industry, WB suggested key areas that should be given due emphasis by policy makers and industry stakeholders. From a policy level, the country is encouraged to enter into more trade agreements which would help diversify export destinations for existing products, such as active wear and intimate apparel. “Sri Lanka could benefit from policies to diversify its export markets, attract additional foreign investment, and capitalize on its skills advantage by producing new, more sophisticated products. And to help firms diversify end markets and export destinations for existing products, policy makers might consider more trade agreements with potential partners,” the report highlighted while pointing out foreign investment remains at 2 percent of GDP, even five years after the end of armed conflict. Stressed as imperative was increasing integration with South Asia and reducing tariffs for the import of manmade fibers which accounts for 50 percent of Sri Lanka’s industry inputs. However domestic growth was encouraged.

Calling to promote industrial relocation and to attract more female workers to relieve labor shortages, industry players were urged to expand into new products such as formal wear and high-end outerwear that require higher skills. It was also stressed that Sri Lanka should work towards positioning itself as regional apparel and textile trade hub by taking the maximum of its infrastructure advantage. Despite these development benefits, the sector has not reached its full potential because of inefficiencies that affect its competitiveness, the report stressed, commenting on Sri Lanka and the South Asian region.

“It is important for South Asian economies to address existing impediments and facilitate growth in apparel to foster the creation of good jobs for development. If they fail to do so—and fail to do so quickly—they risk losing out on a huge opportunity to create good jobs for development given China’s rising apparel prices,” WB cautioned. According to the international agency, successful manufacturers will be those who can introduce new processes, work organization, and technology, while responding to the fast changing apparel industry demands—not just those who offer low costs.